Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
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Chapter 3, Problem 3.62ACT
Issues with cost of job (Learning Objectives 2, 3, & 4)
Custom Cookies produces gourmet cookies with company logos for special promotions. The cookies are customized with the customer’s choice of shape, color, flavor, and decorations. Custom Cookies uses a
| Direct materials (flour, sugar, butter, eggs, baking soda, vanilla) | $1.50 |
| Direct labor (shape and decorate cookies) | 0.50 |
| Manufacturing overhead | 0.90 |
| Total |
$2.90 |
In September, Chesrown Motor Group ordered 400 dozen cookies to present to its clients as holiday gifts. Delivery of the cookies to Chesrown would occur in early December. At the time of Chesrown Motor Group’s order, the selling price per dozen cookies was $7.25.
Chesrown Motor Group placed an order for an additional 100 dozen cookies in November, to be delivered with the original order of 400 dozen. However, since that original order, two events occurred that increased the cost of the cookies. First, the price of sugar skyrocketed due to bad weather in Brazil and India, two of the largest sugar suppliers in the world. Second, a new local cookie bakery is about to open in time for the holiday season and is aggressively trying to hire the cookie decorators from Custom Cookies. In response, Custom Cookies increased the hourly rate of the employees who decorate the cookies to keep those workers from going to work for the competition. All other costs at Custom Cookies have remained the same.
Because of these two events, Custom Cookies recalculated the cost of a dozen cookies as follows:
| Direct materials (flour, sugar, butter, eggs, baking soda, vanilla) | $1.60 |
| Direct labor (shape and decorate cookies) | 0.65 |
| Manufacturing overhead | 1.17 |
| Total manufacturing cost per dozen cookies | $3.42 |
Requirements
- A. Do you agree with the cost analysis for the second order? Explain your answer.
- B. Should the two orders be accounted for as one job or as two jobs in Custom Cookies’ system?
- C. What sales price per box should Custom Cookies set for the second order? Explain why you have selected this per-box price. What are the advantages and disadvantages of this price?
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(Click icon to view data)
Requirement
Calculate the total variable costs of producing 2, 4, and 8 units.
Begin by calculating the cumulative total time in labor-hours using the cumulative average-time learning model. (Round the cumulative average time per unit to the nearest whole number.)
Cumulative number of Cumulative average time
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per unit: Labor-hours
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units
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←
Data table
Direct material cost
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Direct manufacturing labor cost
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In 0.85
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=
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-0.162519
0.693147
81,000 per unit of RS-32
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85% cumulative average timeª
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Chapter 3 Solutions
Managerial Accounting (5th Edition)
Ch. 3 - (Learning Objective 1) For which of the following...Ch. 3 - (Learning Objective 2) Which of the following...Ch. 3 - (Learning Objective 2) Which of the following...Ch. 3 - (Learning Objective 3) The amount of manufacturing...Ch. 3 - (Learning Objective 4) Which of the following is...Ch. 3 - (Learning Objective 5) Which of the following is...Ch. 3 - (Learning Objective 5) Assuming the amount of...Ch. 3 - Prob. 8QCCh. 3 - Prob. 9QCCh. 3 - Prob. 10QC
Ch. 3 - Identify product costs, period costs, and product...Ch. 3 - Decide on product costing system (Learning...Ch. 3 - Determine the flow of costs between inventory...Ch. 3 - Understanding key document terms in a job cost...Ch. 3 - Compute a professional billing rate (Learning...Ch. 3 - Prob. 3.6SECh. 3 - Continuation of S3-6: compute total allocated...Ch. 3 - Continuation of S3-7: determine over- or under...Ch. 3 - Prob. 3.9SECh. 3 - Calculate job cost and billing at appliance repair...Ch. 3 - Calculating overallocated or underallocated...Ch. 3 - Prob. 3.12SECh. 3 - Record manufacturing labor costs (Learning...Ch. 3 - Prob. 3.14SECh. 3 - Prob. 3.15SECh. 3 - Understanding key terms (Learning Objectives 1, 2,...Ch. 3 - Identify type of costing system (Learning...Ch. 3 - Prob. 3.18AECh. 3 - Determine the cost of a job and use it for pricing...Ch. 3 - Compute a predetermined overhead rate and...Ch. 3 - Prob. 3.21AECh. 3 - Prob. 3.22AECh. 3 - Determine the cost of a job (Learning Objectives...Ch. 3 - Compare bid prices under two different allocation...Ch. 3 - Analyze manufacturing overhead (Learning...Ch. 3 - Record manufacturing overhead (Learning Objectives...Ch. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Analyze T-accounts (Learning Objectives 2, 3, 5, ...Ch. 3 - Job cost and bid price at a consulting firm...Ch. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Identify type of costing system (Learning...Ch. 3 - Understand the flow of costs in a job cost shop...Ch. 3 - Prob. 3.33BECh. 3 - Prob. 3.34BECh. 3 - Prob. 3.35BECh. 3 - Sustainability and job costing (Learning...Ch. 3 - Determine the cost of a job (Learning Objectives...Ch. 3 - Compare bid prices under two different allocation...Ch. 3 - Analyze manufacturing overhead (Learning...Ch. 3 - Record manufacturing overhead (Learning Objectives...Ch. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Analyze T-accounts (Learning Objectives 2, 3, 5, ...Ch. 3 - Prob. 3.43BECh. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Analyze Manufacturing Overhead (Learning...Ch. 3 - Use job costing at an advertising agency (Learning...Ch. 3 - Use job costing at a consulting firm (Learning...Ch. 3 - Prepare job cost record (Learning Objectives 2, 3,...Ch. 3 - Determine and record job costs (Learning...Ch. 3 - Determine flow of costs through accounts (Learning...Ch. 3 - Analyze Manufacturing Overhead (Learning...Ch. 3 - Use job costing at an advertising agency (Learning...Ch. 3 - Use job costing at a consulting firm (Learning...Ch. 3 - Prepare job cost record (Learning Objectives 2, 3,...Ch. 3 - Determine and record job costs (Learning...Ch. 3 - Determine flow of costs through accounts (Learning...Ch. 3 - Job costing or process costing for wedding...Ch. 3 - Discussion Questions 1. Why would it be...Ch. 3 - Unwrapped or How Its Made Go to www.YouTube.com...Ch. 3 - Ethics involved with choice of cost driver...Ch. 3 - Prob. 3.61ACTCh. 3 - Issues with cost of job (Learning Objectives 2, 3,...
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